Government of the bankers, for the bankers and by the bankers - FiveAA





SUBJECT/S: Royal Commission into the banks; Competition policy.

LEON BYNER: Andrew Leigh, thanks for joining us today.


BYNER: Has Labor worked out the terms of reference of its proposed Royal Commission into the banks?

LEIGH: It’s for the Government to set the terms of reference Leon, but we've been strongly urging them to do it. We believe there’s a range of issues which a Royal Commission could appropriately explore and that out of that could come a more ethical and a stronger banking sector than we have today. We need to take account of the fact that Australia has seen a whole range of problems in the financial sector. Timbercorp, Great Southern, Gunns, Storm, Trio, Westpoint, insider trading scandals within the NAB and the ANZ, bank bill-swap rates – there's just been too many of these incidents to write them off as ‘bad apples’.

BYNER: What exactly is it that you want the Royal Commission to achieve?

LEIGH: We believe that the Royal Commission should look at how widespread the instances of illegal and unethical behaviour are and whether the regulators are appropriately equipped to deal with the issues they face. Overseas, there's been inquiries into whether the regulation is right for an increasingly vertically integrated banking sector and that's something too that we need to look at here in Australia. As you said Leon, a bank isn't just another company in the Australian economy. The provision of credit is ultimately one of the key determinants of the health of small, medium and large businesses across the Australian economy. So a strong banking is critical to the lifeblood of the Australian economy–

BYNER: But wouldn't it be argued now that we already have one of those?

LEIGH: The important thing is that we don't have more of these scandals. I'm afraid the list I gave to you before wasn’t even a complete list of all we've seen.

BYNER: I know. Yes.

LEIGH: What we've got here, frankly, is a government where the Prime Minister is a former banker, the Minister for Revenue is a former banker, the Cabinet Secretary is a former banker. It’s a government of the bankers, by the bankers, and for the bankers.

BYNER: But does the PM have a point that a Royal Commission costs a lot of money and can drag on for years and may not achieve what's intended?

LEIGH: When it came to the incidents in Northern Territory detention, the Prime Minister felt that these were serious and that they required the most serious of responses – which was a Royal Commission. He acknowledged yesterday that there are cultural issues within the Australian banks, but he doesn't believe that the serious response of a Royal Commission is appropriate there. Instead he wants to invite the banks to Canberra once a year for lunch on a committee which, as I read it, is likely to be chaired by a bloke for who's the Member for Banks. And that tells you all you need to know about how seriously this is going to affect the banks.

BYNER: So you guys will press ahead with this bill of a Royal Commission, hoping that there'll be people crossing the floor to get it up?

LEIGH: Absolutely. We certainly heard from people like Warren Entsch and Wacka Williams that they believe that things have gotten more serious than simply requiring a gentle chat once year with a parliamentary committee. But a Royal Commission is able to look systematically at the sector and ensure that Australian banks emerge stronger.

BYNER: So Steve Munchenburg what do you say to that?

MUNCHENBURG: I hear everything that Mr Leigh is saying and he has rattled off a whole pile of issues which we have acknowledged. Some of those are in fact issues and we are actually addressing those. Many of those that you've mentioned aren't in fact bank issues but other parts of the financial system and some of those things are before the courts and the courts are the appropriate places for those to be sorted out. We still argue that action now is better than just another enquiry. It's only about 2 years since we had the biggest enquiry into the into the financial system in over 17 years so we need to get on and fix these. We acknowledge that and that's what is happening.

BYNER: So Andrew Leigh, when will the public of Australia know whether this is a goer or not?

LEIGH: When Malcolm Turnbull finally does the right thing. This idea of a parliamentary inquiry is a third-rate idea - worse even than Malcolm Turnbull’s second-rate national broadband network. In the past he has done the right thing on other issues when finally the pressure has gotten strong enough. What's important here, Leon is that the public maintains the pressure on the Prime Minister to do the right thing. I hear what Steven is saying about the importance of investigations following their proper course and I certainly wouldn't be arguing for an investigation to be held up for a Royal Commission. But I do think that we can get that Royal Commission under way and frankly Australians across the political spectrum are calling for this.

BYNER: Alright, before I let you go, you are an economist as well. Paul Clitheroe made the point a couple of days ago, irrespective of the politics or whether we have an inquiry or whether we don't or a Royal Commission. He said Australians have got to learn to be far more shopping around aware just as they are with a lot of other things that we buy in the money market, do you agree with that?

LEIGH: Yes absolutely. When we were last in Government we abolished mortgage exit fees which was an important way of promoting competition in the banking sector. We need to make sure that Australians are as well-informed about their choices both in terms of where they keep their savings and where they take out their mortgages. We need to make sure there is more competition in the credit card market. That’s a market where if you're carrying a credit card balance, Australians are often paying a lot of money. So boosting competition matters but it's also really important to make sure that the products out there are as good as they can be.

BYNER: Alright so Andrew Leigh, Shadow Assistant Treasurer and the Australian Banker Steve Munchenburg, thank you both.



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